Instantly Growing Up

By John Greenwald

Bing-bong-bong-bing! It began with countless computer kids tapping out chiming instant messages to their pals. Now, in a classic case of adults playing techno-catch-up, America's workforce is fast discovering the benefits of instant messaging too. An estimated 20 million employees, representing half of all big U.S. companies, routinely fire off pop-up missives in lieu of cumbersome conference calls or e-mail--which now seems as plodding as a telegram. "This is no longer about teenagers and chat," says John Patrick, vice president for Internet technology at IBM, whose Lotus Development unit produces Sametime, the leading instant-messaging program for business use. "If I were to check right now," Patrick says, "there are probably 100 [instant-message] meetings going on all over IBM."

Yet proprietary software like Sametime is just one reason why IM chimes are suddenly ringing throughout the workplace. Far more messages probably come from employees who have downloaded such programs as America Online's Instant Messenger (AIM) or the rival Yahoo Messenger, both of which are available free on the Internet. Workers aren't even waiting for information-technology departments to install a corporate system. "This is all spreading by word of mouth," says Neil MacDonald, a vice president of the Gartner Group research firm. "Companies weren't planning on instant messaging, but it's become a critical part of business today." Gartner predicts that by 2003 at least some employees at fully 90% of big U.S. companies will be swapping instant messages. Although given the speed with which IM is spreading, that date seems conservative.

Workers love IM for the same reason that kids do: it lets them hold virtual meetings anytime and anyplace. No more playing telephone tag or pulling down an e-mail screen. Instead, IM users can spot who is online at a glance and start chatting right away. And they can do so across time zones, oceans and continents. At the stroke of midnight last New Year's Eve, 80 IBM experts from around the world huddled online to monitor the company's defenses against the Y2K bug. "If there had been a crisis," Patrick says, "all the knowledgeable people would have instantly shared their expertise."

Such seamless communication is fast winning over everyone from toy retailer FAO Schwarz--which has put a downloadable IM link to customer service on its website--to the U.S. Navy, which uses the Sametime system to connect a 16-ship battle group in the Atlantic Fleet. Closer to home, long-distance provider Sprint uses software designed by Bantu Inc. to enable employees to chat while watching online PowerPoint displays. Messages can also be sent and received by a variety of wireless devices, including cellular phones.

But for all its popularity, the IM world remains frustratingly balkanized. At least a dozen systems are in service in the U.S. alone, many of them incompatible. This confusion adds to the pressure on AOL--which popularized instant messaging and commands a 90% share of the market--to allow rivals like Yahoo and Microsoft access to its IM systems. These cover some 80 million users under the AOL brand and a similar number under ICQ, an Israeli company that AOL bought two years ago. Says MacDonald: "AOL's installed base is the crown jewels of instant messaging."

In fact, AOL has licensed its IM protocols to more than a dozen companies, including Lotus, Apple Computer and the search-engine Lycos. But it has consistently blocked access to Microsoft and others that have tapped into its systems without authorization. AOL argues that such intrusions violate the security and privacy of AOL users and burden the servers that AOL has built and must pay to maintain. "Basically, anyone who has asked them politely has got in," says Joyce Graff, a research director at Gartner. "But when they have not been asked and suddenly another 2.5 million users start beating up on their server, they say, 'Excuse me, buddy, but you're not welcome here.'"

The licensing arrangement suits companies such as Lotus, whose Sametime system encrypts messages and allows users to operate behind a firewall designed to keep out intruders. Employees can then plug in to the AOL user base to chat with family, friends or workers at other companies.

Access to AOL's IM users has become a hot issue for regulators who are scrutinizing the company's proposed megamerger with Time Warner (parent company of this magazine). The Federal Trade Commission may demand some form of open access as a condition for approving the deal, as has been hinted, or it could agree to allow instant messaging to remain unregulated. With the stakes so high as the review winds down, the atmosphere among regulators has become testy. Sources tell TIME that the FTC, stung by leaks about the deliberations, has launched a probe to uncover any unauthorized tongue wagging within the agency.

On one issue all sides appear to agree: the industry would benefit from a single standard that lets all IM systems communicate freely with one another. "It just makes no sense to keep them separate," says Laney Baker, a Salomon Smith Barney analyst. But striking a deal on a single standard is another matter. Just last week an industry group that had been struggling for months to create a unified protocol opted instead for as many as three separate standards that can interconnect. "The big players--AOL, Microsoft and Yahoo--tried to dominate the field by saying, 'My solution is best,'" says Navi Radjou, who followed the talks for the Forrester Research firm. That left the standards group no choice but to recommend several protocols. The problem is that when new features like voice recognition are added to systems on one protocol, they may not connect well with the others.

Some critics doubt that AOL really has much interest in a common IM standard that would provide access to its enormous customer trove. "It comes down to this," says Blair Levin, a former FCC chief of staff who represents AOL opponents. "Everyone agrees there should be interoperability and that it should happen as quickly as possible. AOL says, 'Trust us to get this done.' We say, 'Look at the record.'"

Yet even as all sides bicker, instant messaging is becoming indispensable to business users. At IBM, which runs 2 million instant messages a day, the technology is just getting started, says Patrick. IBM and Lotus engineers, he says, are currently assembling an IM system that combines voice recognition, language translation and text-speech conversion. Its use? "I could ask a question to a customer-service representative in Spain, who could bring in the most knowledgeable person, who might happen to be Chinese. So you could begin to think of this as a real-time multilingual intercom." Now if only competing IM systems could blend together as smoothly.

--With reporting by Mike Eskenazi/New York and Viveca Novak and Adam Zagorin/Washington

With reporting by Mike Eskenazi/New York and Viveca Novak and Adam Zagorin/Washington